Design Patterns: Social Organization

The social organisation of individuals under the jurisdiction of, and as participants in government can be defined by three broad categories. These are; the intrinsic, the emergent and the dispossesive. These can be used to inform the extent of government, and derive its responsibilities.

Intrinsic

The intrinsic categories are the conditions that need to be met for and individual to agree to government, and for the government to be legitimate. One of the intrinsic values of an individual is a natural defiance of tyranny. Whether by action, or social organization, individuals seek to remove tyranny from their interactions. Tyranny is being under the arbitrary will of another, especially in the respect of an individual's person or property.

Australian Republicanism is devoted to defeating tyranny in government, not matter what its form, and ensuring that all individuals under the jurisdiction of a government, are, without exception, secure in their political rights. These begin with the freedom from government tyranny. As soon as a government practices tyranny against an individual, or minority, then it is no longer legitimate.

Without the protection of an individuals political rights, there is no reason for an individual to agree to be under the government. If the oppression is so strong, then an individual would be better off in nature without government. This assumes of course that a government would allow the individual to do so. In most cases, particularly nation-state, immigration is tightly controlled, and new members of the population have little choice.

The intrinsic component of social organisation raises the democrat as the dominating political philosophy. One where government is permanently responsible to the people, if not directly populated by the people. Representative government was developed in a time where property was held by a small number of people, where education was a privilege and while communications came no faster than a horse or sailing ship.

Today we live in a society where a significant minority are as well educated as the leaders of Executive government. Where communications have been transformed into a global decentralised network, of such low cost, that everyone can be a publisher. There is also more equality in wealth and property, due to the rise of the middle class in the twentieth century. It is in this environment that the democrat must discern new political technologies and methods to guarantee our political rights, and the responsiveness of government to the people.

Social, cultural and economic prosperity is impossible without maximum liberty.

Emergent

Complex systems interact in a way that makes their output greater than the sum of their inputs. These can be termed the emergent properties. This would include society, culture and economy. Quality engineers often spend a great deal of time mapping and charting their complex system through statistical modelling, and then intrude upon them by what is known as "selective tampering". Unless every input and output is known, this selective tampering often makes the system vary more in quality, rather than hone it. As a consequence Quality Engineers use reductionism to try and make the inputs and outputs known.

In very large complex system, the inputs and outputs are largely unknown - simply due to the sheer size of the system, and the near infinite number of possible interactions. In these systems, interference, or selective tampering in nearly all cases results in an inferior outcome. This is because interference adds a cost to interaction between actors in the system. Hampering the natural outcome.

Government does have a role as not only an actor in the system, but often simply because of its economic size and its ability to legislate through its monopoly on violence, as a dominantly influential actor. It is a yellow point. Currently the government consumes about 35% of Australia's GDP in taxation. This makes it by far the largest economic actor in Australia.

This is not necessarily a good thing. Government is by structure, and design, a centralised system which collapses political, coercive and economic power into a few individuals. This skews, and often obliterates the emergent properties of a society, culture and economy. Since World War II, and in particular the 1980s, Australians have been sensitive to government involvement in the economy, believing that it produces inferior outcomes in relation to the creation of wealth, and the economy's ability to meet a market.

However, we have also seen in the last fifty years a willingness for government to interfere in societal and cultural issues. More recently we have seen the self-professed "culture wars", which is government and conservative commenteriat backed. Society and culture are complex emergent systems which work more efficiently without government intervention. They are no different to the economy in this aspect.

Dispossessive

The existence of the state carries its own burden. These are commonly externalised in the form of taxes. A common phrase is that taxes buy civilisation. In reality, taxes buy a judicial system which can hold-off tyranny and ensure that interactions between individuals have an equitable basis.

The establishment of social programs such as unemployment benefits and pensions have helped remove the troughs and stings in poverty. Empirical evidence shows the social value of such programs. It would be silly to deny their use, and that government has no role in these areas. By the same token, any of these programs should be predicated by the emergent properties defining them. For instance, it is perfectly acceptable for a society to decide that there is a level of poverty no-one should fall below. It is also perfectly acceptable for a society to decide there is a level of access to health that no-one should be denied. It is not acceptable for government to decide these things for society.

Government involvement in these areas carries danger, not only from government inertia to change, but because government involvement infringes on liberty and inevitably retards the emergent process of society, culture and economy. For this reason any social program must be founded in empirical studies to ensure they have true benefit, and are not ideological fashion, or populist pandering. This is true for all government action.

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The Path To Equity

In a previous article titled, Social Organization , the three broad categories of social organisation in relation to government were explored. Equality, rather than being a universal concept, is adaptive, and follows the demands of the categories of intrinsic, emergent and dispossesive. It is in the intrinsic category that liberty and justice combine to ensure the uniform equity of every individual under the government's jurisdiction through universal political rights.

Intrinsic Equity

The intrinsic component of the government system is where equity must be absolute. Political rights must be uniform for all who are under the jurisdiction of the government. Liberty must be equal for all individuals. The justice system must be replicable, uniform, non-discriminative and accessible to all. The intrinsic component is the most primal essence of political equality.

The intrinsic component of social organization is derived from humanity's natural resistance to tyranny. The Constitution speaks to the intrinsic nature of organisation and is not complete unless it eradicates tyranny and provides safeguards for any tyranny which may leak through.

Maximum liberty and uniform justice are the paths to equality in the intrinsic component.

Emergent Equity

Modern economists often argue for economic liberty which limits the interference of government on the allocation of capital, and manufacturing quotas. This was largely in response to socialism in the early part of the twentieth century. The decentralised nature, and innovation of capitalism and economic liberty out-competed the Soviet Union's economy over a period of approximately thirty years, leaving the Soviet Union on the brink of economic collapse.

Society and culture are similarly complex systems who respond with great vigour to liberty and unrestrained growth. Government interference in society and culture is as damaging as Government interference in the allocation of capital and manufacturing quotas. At its most extreme this is totalitarianism. But all nation-state governments practice a form of nationalism, in one way or another. This is to create a false legitimacy in the government beyond ensuring equity of liberty and justice. Nationalism is an intrusion on society and culture.

The emergent component is the public realm of complex interaction. Like all complex systems they are at their most invigorated and innovative when the interactions occur without interference. Political rationalism became a by-word in Australian economic theory in the 1980s, Cultural and Societal rationalism need to become as common in political debate as economic rationalism has become.

Dispossessive Equity

The dispossesive is the burden of maintaining government. This includes ensuring that political rights are not infringed, that justice and access to the judicial system is universal, and that liberty is protected. The dispossesive can also encapsulate emergent programs that the electorate requires to be taken on. In the last century that has included programs such as universal education, welfare to protect against poverty and retirement. This raises issue as to how the funds necessary to support these programs can be raised.

The goal of any social organisation is to foment prosperity. This can be taken as the starting point for an equitable system of taxation. Those that have prospered from economic liberty have a moral responsibility to not only maintain the present system of maximum liberty, but also to ensure those that have not prospered by it, are given every opportunity to achieve in this environment. It can be derived from this principle, that taxation should not begin until after the point of prosperity.

There are two ways to determine the point of prosperity, either as those who are above the average salary, or corporate taxable income. Or those that earn the top half of all income, either private or corporate taxable income. For instance, in 2002/2003 total private income was $352,499,306,474 which was shared amongst 8,634,249 taxpayers. For corporate tax total taxable income was 156,777,560,537 shared amongst 664,146 businesses.

Using the average income as the point of prosperity;

Using half of total taxable income as the point of prosperity;

I find using those that have half of the taxable income is a more equitable system of taxation. This would have the added advantage of removing the highly regressive nature of the current Australian taxation brackets. Those that have prospered carry an equal burden in ensuring not only maximum liberty remains, but also that those who have not prospered in such a system, get every opportunity to do so. This equal burden should be carried through to the taxation system. I recommend that;

The danger in this system is that government would skew the equitable nature of it by giving all manner of tax breaks and resulting in the 11,000 page mess of a tax code we have now. But we have that mess now. Adopting this equitable and prosperous model of dispossession, we would have a simpler, fair, and more just system of taxation than the current one.

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Scrymarch: Why make corporate tax progressive?: One person can own many businesses.  Doesn\'t this artificially skew things towards owning many small businesses?
cam: I am trying to derive policy/action: .. from wider, maybe even universal principle. I am prepared for parts of it to not be feasible. I cant find the 2002/2003 tax report again (I always lose it, I should book mark it), but IIRC only a small number of companies were over the million mark in taxable income which is much smaller than actual income, in most cases by two orders of magnitude.

I was also trying to determine if the same principles could be applied to capital gains. But the data didnt suit that kind of analysis.

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Scrymarch: Understood: ... I just think a distinction between people and legal abstractions is a useful first principle.
cam: Is the limited liability concession: is the contruct that you think should be treated differently? They could be flat taxed without exception. That may cause flight into sole trading, partnership and private companies which would have the advantage of tax being easier to trace to individuals.

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cam: The other issue is: entrepreneurship needs to be encouraged. Commerce is where most is wealth generated, and whether we like it or not, modern society is predicated around us all being job-holders/income-earners. The wealth has to come from somewhere.

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Scrymarch: I don\'t mind limited liability that much: I just think it should be acknowledged up front that corporations are sock puppets without rights to welfare or redistribution on the basis of equity, such as would apply to people.
cam: Yeh, the tax part probably wasnt a good place: to put in an article on equity. It kind of followed on. I was trying to avoid regressive (and burdensome) taxation, by only taxing the winners of the system. The winners and losers can be divided by those who have prospered and those that havent. I took prosperity to be those that were in a bracket that was the top half of all income. Since income is taxable for individuals and companies, I thought it would be a practical method to determine when taxation should start for both.

Another issue is, if tax doesnt start until a million for a corporation, individuals will be incorporating themselves. It might skew toward a contractor style of employment. Most people choose salaried work, either because they have to, or for the security. That would kick that stable influence in the market out.

Another way of attacking the problem could be to start the progressive (or even flat) tax at the same level for both corporations and individuals, which is about $60,000.

Or, taxable income for both individuals and corporations could be combined and then divided by the sum of taxpaying individuals and corporations. From this the halfway point of income could be found. I would have to do the sums again (and find that blasted 2002/2003 tax report) to see what it comes out at.

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dlatimer: How to avoid taxes forever: As I understood it, once over $60,000 you pay 30% on one\'s whole income. So if I earn $80,000, I end up paying $24,000 tax and left with $56,000? What a tax trap!!! Better to avoid taxes forever by staying lower than $60,000 or whatever that year\'s rate is. If you must earn more, start a company.

Other problem - government goes bankrupt. Even if lots of people paid the full 30%, it would not be anywhere near enough to finance government spending.

Have you thought about http://en.wikipedia.org/wiki/Negative_Income_Tax?
cam: It would be progressive: You would only pay 30c on every dollar earnt over 60K. As scrymarch pointed out, an individual can have money companies, so can spread their tax liability that way too and avoid tax.

Another reason to try and derive the dispossesive is to find the upper boundary of the state. The Australian government has been constantly growing in size under Howard .

I will put together something which compares this style of tax model to the existing one to determine if they differ much in revenue. I just had a glance at the 2002/2003 report, and the data isnt really presented in a way that I can do that quickly and easily.

On the issue of Negative Income Tax, I would prefer the government didnt take it in the first place. Having taxation not start until an individual reaches the top half of all income would remove much of the regressive nature of our tax system.

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dlatimer: Criticism of the "us v them" tax system: It\'s very easy to say that the government should spend less. Government services would be replaced by personal spending or business inefficiency.  For example parents would forced to contribute more to schools or universities. The ill would contribute vastly more to their health care and businesses would be hindered by poor roads and lack of other infrastructure.

Taking in a fraction of the existing personal income tax cake would cause great economic instability. Therefore as a starting point, a fundamental change in the tax system should be discussed in revenue-neutral terms first.

If one is to have a progressive tax system, the smoother the transition from lower to higher incomes (either more brackets or a negative tax system) the less the problems with poverty traps, tax traps and bracket creep. Such an enormous tax free threshold will encourage those near $60,000 to stay below the threshold, distorting the labour market.

A flat tax is at least fair in one obvious sense. Yours is a flat tax on half the population -- in effect, a transfer payment from the half the population to the other half. That is obviously devisive.

Ultimately, the conclusions of the main article are based on a simplistic understanding of the economic and social justifications for government spending and fair taxation systems.

The negative tax system has a social formula like your proposal, but it\'s rational to replace the minimum wage and welfare systems with a baseline guaranteed minimum income providing blanket elimination of poverty. To say you \"would prefer the government didn\'t take it in the first place\" is to deny the reality that transfer payments are at the heart of most spending by modern western governments even for the middle class.
ranomatic: Negative Income Tax: I read the referenced Wiki page on this. It lists Milton Friedman as a proponent. I never really studied Milton\'s theories, but I know his son David, who is also an economist. David has a more anarchistic view. Check it out.

Following the links from the negative income tax Wiki page was interesting. For instance, Milton Friedman is also a main backer of education vouchers . I guess you learn something every day. Good link.
dlatimer: School Vouchers: The subsidisation of education by the state is a great example of taxation policy in action. The existance of public and private schools is an example of transfer payments from private school parents to public school parents. Of course, private schools in Australia are subsidised too. From another perspective, the education of young people (especially teritary education) is a transfer from taxpayers to business owners. Again, there are non-economic benefits of education such as those underwriting our democracy.

We could remove the subsidisation, and return the taxes to parents to pay for a private education. Children with responsible parents would be no worse off, especially if the returned taxes were spread across our progressive tax and welfare system. Of course, there are irresponsible parents.

I say this not in support of any change or policy but to illustrate the complexity in determining tax fairness -- and this is the tip of the iceberg.

And I am forgetting about adults, who have no child to educate, but will depend on the children of the nation during their senior years.
Scrymarch: The Stone Soup Argument of Government Services: This is basically the argument that unless the middle classes see government largesse going directly to them they won\'t support broader, progressive taxation efforts to the less well off.

I find this ridiculous and ultimately patronising.  If government services like a public health service are worthwhile - and I believe they are - they can be paid for directly.  No leviathan-knows-best shell game where the government takes money away just to give it back to you as, say, family payments, should be required.

The reason given for the tax merry-go-round is always care for the needy in society, but the result is always the expansion of central government and the creation of obligated clients in the polity.  And for what?  So my $5 note can go to Canberra and come back to my own pocket as $4?  For some reason that fails to make my chest swell with the spirit of collective solidarity.
Scrymarch: And before you know it,: ... you\'re poring over the details of the Icelandic commonwealth and wondering how it relates to the Scandanavian sartorial parties of 18th century Sweden .

Or at least if you\'re me you are :)
ranomatic: That is the funniest thing I read today.: The Wikipedia can really suck you in.
cam: Yes it is simplistic: the tax system is overly complex as the government tries to social engineer through it. I think it is up to 11,000 pages. We have professions trying to make sense of the political mess that is the tax system.

But it is simplistic for a reason, it is to define a moral obligation as well. Those that have prospered in the system of liberty and justice have a responsibility to ensure its upkeep. It allows those that have not yet prospered in it (are not in the top half of all income) to not face the burden, penalty or punishment for not having prospered in this environment yet through heavy handed taxation.

Too often the poor and middle income earners suffer regressive taxation at the hands of a tax and revenue drunk government. By limiting taxation to those that have prospered, it also limits the power and revenues of government. At the moment the government is the most powerful economic entity in Australia. It has revenues that are approximately 35% GDP. Yet with all that power, it faces elections, not the fickleness market. Corporations and products do not get three year tenures from consumers. So there has to be some rationalistion there.

But liberty and justice are paramount. The former is achievable through constitutionally protected political rights, and limits on government (economic too). The latter is protected through a replicable and just judicial system. These are the price of prosperity and freedom of individual, social, cultural, political and economic action. Someone has to pay for them, it is equitable that it be those that have prospered under such a system.

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dlatimer: Point missed: This is not about $5 being returned as $4 -- you are separating the real value of government services from cash transfer payments. That $4 may include $1 of cash payments (eg you are retired), $1 to national defence and police, $1 to the local hospital, $1 to cleaner air.

Absolute user-pays health results in users making choices about their health based on their economic situation. Some people, who should go to the doctor choose to save their money. This violates basic liberal principles because such action is interfers with the rights of others to have a healthy environment. The fundamental objective of the state is the defence of its citizens.
dlatimer: Its not simple because its genuinely complex: Moral obligation is perhaps a more complex matter than the 11,000 page of tax regulation. Who prospers? Everyone.

Rich people get police and defamnation laws. Middle class get superannuation, freeways, pensions and inducements to have babies and private health insurance. The poor get welfare, buses in the middle of the day and employment agencies. This is hardly a matter for a simple moral formula.

The amount of tax regulation could be simplified with a flat tax. This would short-circuit most of the tax schemes, the real reason for the blowout.

A more modest idea would be to scrap the various deductions available to employees, which is also a mess. OR scrap GST free items such as food, water and air. (OK, air is not GST-free)

These are mere ideas - I don\'t support them.

The government is selling Telstra, so that is making government smaller and more limited, but will probably make our taxes higher. You see: the government is not revenue drunk. They hate revenue!

Governments operate where markets and companies would probably fail or be grossly inefficient (eg paying 50 cents every time you used a public toilet) That in itself tells you: Hey this is complicated!
dlatimer: If your point is only about negative tax: then the argument about \"$5 note can go to Canberra and come back to my own pocket as $4\" is far fetched.

Have you ever filled out a BAS form? You write: money owed to government $5; government owes me $4; attached my cheque is for $1.

Are you completing an income tax form? You write: I earnt $20; employer took out $4; actual tax owed is $5; attached my cheque is for $1.

A negative tax uses the formula, say:
  Tax owing = Income x 30% - $8,000

Only if you are poor do you get an actual cheque, because you pay the full 30% on all income, but your benefit is not reduced due to work, so there\'s no poverty trap. Once in full-time work, you tell the government, the cheques are stopped and taxes are taken out of your salary PAYG using the standard formula. Most employees would not even need to fill out an annual income tax forms.
ranomatic: This is sarcasm, right?:
You see: the government is not revenue drunk. They hate revenue!
Scrymarch: It\'s not negative income tax specific: I\'m fairly sympathetic to the negative income tax idea actually.  But this comment is revealing in that you ignore the transaction costs of introducing government middlemen.
Scrymarch: We\'re arguing past each other: In the great-grandparent you wrote:

Government services would be replaced by personal spending or business inefficiency

This is true to an extent, but not all government spending results in government services.  Middle class welfare is particularly ridiculous, Here\'s Craig Emerson sticking the boot in , though Labor have been guilty of it in the past.

Middle (and upper!) class welfare payments in the form of cash transfers are ridiculous.  There\'s very little benefit here except to the political class.  They\'ve inserted themselves as middlemen between my wallet and the supermarket!

As I mentioned below, you\'re completely ignoring transaction costs.  That $4 is .50c to the tax accountant, .50c to pay the taxman to interpret the 10 page tax return and find out if I claimed a self-education expense under sub-section C (Attending John Farnham concerts) when it should be claimed under sub-section E-3 (attempting to sing your VCR manual in the original Korean), $1.50 to health payments, .50c to national defence and police, $1 to schools and universities (funnelled through another layer of state bureaucracy) ... and when John Howard spends 20% of the budget on the environment, I\'ll eat my hat :)

The problems of life amongst the 20 million other people in this great brown land of ours are inherently complicated.  The tax code, however, is complicated because it serves the needs of the political class and the clients they\'ve created.
Scrymarch: Toilet payments: Actually paying for toilets is quite common outside the rich world, or even in continental Europe.  It\'s a frustration I\'m happy to be without but I saw no particular evidence it was inefficient.  They certainly didn\'t fail with any more frequency than government supplied toilets.
cam: Pay toilet story: My mother was in France where there was a pay toilet, her and some other enterprising Australians decided to game the system, by keeping the door open after it flushed, and the next person slipping in. One person went, held the door open, next person went in; there was a loud scream and a very wet Aussie came running out.

Apparently the toilet flushed water down its walls. Both hygienic and stopping scurralous Aussies getting to sit on the bowl multiple times for one franc. Now that is design and engineering.

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ranomatic: As long as we\'re on toilet stories: I was once on a bus trip in Kazakhstan, on my way to a project site.  This trip takes 6 to 24 hours depending on weather and road conditions.  In this case, both the weather and roads were ok and we made a steady 40kph pace.

The bus made what were called \"rest stops\" several times. On the first stop I couldn\'t understand why.  Men got out, fanned out from the bus for a while, and reboarded.  On the second stop I could see they were using the great desert toilet (aka the nearest tumbleweed).  This is apparently normal for inter-city travel there.  It gives you a whole new appreciation for public toilets.

As a further off-topic aside, I saw no women attempt this even though about half of the passengers were female.  At the end of the (in this case) ten hour trip, I am sure they had an even greater appreciation for public toilets.
dlatimer: Transaction costs: You\'re right. I didnt take your comment as concerning transaction costs, of which there are two parts - (A) the cost of running the tax office and (B) the costs to businesses and individuals in organising their tax affairs.

To that we could add the psychological transaction costs, because every quarter I become totally paralysed with the thought of doing the BAS and hoping my cashflow survives.
dlatimer: Double experience: Got out of the bus at an ungodly hour in Turkey, went to the toilet. First time in my life that I had to pay. Went inside and couldn\'t see any toilets - they were just squat holes, another first for me. I thought, what an introduction to the user pays principle!
dlatimer: Wikpedian: Not to mention, when you start to contribute or write to articles. Then the edit wars!
cam: In Belgium the pay toilets have: ... someone in there with you, to collect money, and give you a hand-towel. That freaks me out though, toilet patronage is a fairly private act to my point of view.

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avocadia: Public toilets:

I have been thinking - on and off - since you lot started with the toilet stories trying to remember ever having encountered a genuine public toilet in Sydney. There\'s certainly nothing in the barren wasteland that is North Sydney. The only toilets I can think of are ones inside the shopping centres, train stations and office buildings. The first two are public. The last is more or less so.

I suppose train station ones are nominally run by the government. The others though are run by private companies and yet free. They are also a lot more efficient - clean and working - than the ones in the train stations.

Having said all that, I grant you that trying to argue the toilet example would be missing the point by a wide margin.
dlatimer: Public Toilets in Sydney: There are public toilets in Sydney, but they are not well signposted and mostly associated with parks and stations (but not on the platforms). QVB and other main bldgs have public toilets.
dlatimer: Toilet Costs: I guess the toilet at Town Hall Station would have about 4000 customers every day and easily could earn about $10,000 per week.

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